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Try not to get in front of this in case Benny decides to turn back the odometer and shift this pig into overdrive for the sake of public confidence.
"Did you know that there are two seasonal patterns with an accuracy ratio of 90% or higher? This is no joke. The numbers don't lie, but there is one caveat.
The January Barometer has a 90% rate of success. The essence of the January Barometer is simple, as January goes, so goes the year. If January is up, the entire year will be up and vice versa.
90% Accuracy - Too Good to be True?
From 1950 to 2008 this pattern has played out most of the time. There were only five times when it outright failed and seven times when it wasn't exactly accurate. According to the Stock Trader's Almanac, the Barometer has a 90% accuracy ratio. In terms of odds, that's about as good as it gets.
However, the January Barometer led investors in the wrong direction in 2001 when the S&P was down a full 13% at the end of the year after being up 3.5% in January. Again, there was a major misfire in 2003 when the S&P finished with a 26.4% gain after a 2.7% January loss.
There was a minor misfire in 2005, but the Barometer couldn't have been more wrong in 2009 and 2010. In 2009 the S&P was down 8.6% in January but ended the year with a 23.5% gain. After a 3.9% January loss last year, the S&P (SNP: ^GSPC) finished with a 12.6% gain."
ETFguide
Today's market commentary is included here.
On the news that JP Morgan bankers will be splitting a $10 billion bonus pool, the Robin Hood Tax campaign said it was "outrageous" that JP Morgan Chase's investment bankers are to receive an average payout of $369,651 (£233,000) for 2010. The group, which supports a global tax on banks' financial transactions, said the size of the payments were "a slap in the face to ordinary people".
"If banks can afford to pay billions in bonuses, they can clearly afford to be taxed a great deal more. A £20bn Robin Hood tax in the UK would help avoid the worst of the cuts and show we are all in this together," said David Hillman, spokesman for the Robin Hood Tax campaign.
"While bankers wallow in cash, the general public are suffering unemployment and cuts to public services," Hillman added.
The financial media news are beside themselves with the after hours news that British Petroleum and the Russian state-controlled oil giant Rosneft will be swapping spit and taking long walks in the park, with potential consequences yet to come. BP is nominally a private company, but Her Majesty's government still owns a 'golden share' which it uses to make suggestions to a number of her subjects and especially former children, as do most developed nations. Or so I have been somewhat reliably informed.
After all, the Yanks have called dibs on the Mideast. Someone has to grab the Arctic while it is still melting.
It appears to some like a pre-emptive strategic move by the Brits who have been concerned about rumours of a joint economic deal developing between Germany and Russia involving engineering expertise and energy products such as natural gas.
The couples seem to be pairing off, but the evening is still early, and the band is just warming up.
There was a concerted effort to drive down the price of gold and silver this week, much moreso than any usual price correction or pullback. For those that watch the markets on a daily basis such a market operation is hard to miss, but easy for the monied interest's commentators to rationalize.
Late note: The drop Thursday was due to short selling as the open interest ROSE.
"The CME Final for Thursday confirms that volume was 252,778 lots, 29.2% or 57,000 lots above estimate. Open interest rose 1,449 lots – 4.51 tonnes or 0.24% - to 590,817 contracts. Gold fell $17.05, or 093% basis stock market close. Yet it was obviously not a day dominated by long liquidation – short selling had the edge."
So why did it happen this week? Here are two theories.
The first is that JPM was given a 'green light' by the CFTC this week, which I heard from several sources. Here is a writeup on this by Chris Martenson.
CFTC Caved In to JP Morgan - Martenson
I do not know if the CFTC 'caved' in to JPM or not because I have not had time to consider the matter. I will be disappointed greatly if this is true, and if Brad Chilton was a party to it. But it is a la mode of the Obama Administration.
The second and most probable in my mind is that the US Consumer Price Index (CPI) came in much higher than expected today. The Fed and Treasury are very concerned about managing the perception of inflation, even as they levitate the stock markets on excess liquidity to manage the perception of economic recovery amidst growing foreclosures and jobs losses. I was actually on the lookout for this one since the arrival of adverse economic data is the second greatest cause of a smack down in the metals, the first being key date such as an option expiration.
"There are numbskulls in the financial media — toadies to the Federal Reserve — who would like to think that energy and food inflation do not count. Simply put, the monthly December inflation releases for the CPI-U (annualized 6.2% inflation), CPI-W (annualized 7.8% inflation) and PPI (14.0% annualized inflation) were disasters, with December inflation far from being calm, as touted in one widespread media report. The sharp increases in December energy and food prices were not due to normal price volatility in those areas, instead, they were created directly by Federal Reserve Chairman Bernanke’s ongoing push to debase the U.S. dollar — to destroy the purchasing value of the U.S. currency. As Mr. Bernanke moves to prove his contention that a central bank and central government can create inflation at will, by debasing their currency, the bad news for the Fed remains that the inflation created here reflects monetary policy distortions, not strong economic demand, as naively advertised. Then again, since much of this inflation mostly is food and energy, not yet "core," the problem of rising gasoline prices may not even be a concern for the U.S. central bank. Nonetheless, these problems are serious and are problems specifically of the United States and for the U.S. dollar.
There is little happening here that I have not written about recently (see for example Special Commentary No. 342). Since I am traveling and am heavily under the weather with a seasonal malady, this morning’s comments will be brief, but the inflation issue will be reviewed in the pending update to the Hyperinflation Special Report and supplements to same.
In the economy, it looks like the "advance" fourth-quarter GDP (January 28th) will be positive, given the numbers discussed below. Significantly, though, major negative revisions to data, such as payrolls and production, loom post-GDP reporting. As to retail sales, keep in mind that the December increase was due to higher prices, not to underlying strong demand. There remains no recovery at hand.
Increasingly, global investors will shun the U.S. dollar, as its purchasing power increasingly gets hammered by Mr. Bernanke et al. The regular gold, silver, oil and Swiss franc graphs are shown below. As investors flee from the dollar, the precious metals and stronger major currencies will continue to be the primary beneficiaries in U.S. dollar terms, irrespective of any near-term market volatility, extreme or otherwise. More-prudent economic and fiscal actions taken by major U.S. trading partners will tend to make the U.S. dollar look all the worse on a relative basis."
John Williams - Shadowstats.com
Those who do not think that the Fed and Treasury watch things like the price of gold are greatly mistaken. Much of the current activity of financial engineering these days revolves around the management of perceptions rather than real productive results. Its the modern American way.
"Turn where we may, within, around, the voice of great events is proclaiming to us, 'Reform, that you may preserve!'" Thomas B. Macaulay
Please notice that I have added the possibility of a trading range developing in gold now that the uptrend appears to have been broken, although it will take another week and the January 26 option expiration to tell the whole story on this.
